Franchisors Building Broad Push Into IT Services

For half a century, R.K. Black sold office equipment in Oklahoma, Missouri and Kansas. These days, the company still sells and services copiers, fax machines and printers, but it's added a new offering—managed IT services for SMB and SoHo users.

The small, 80-employee company didn't build an MSP division, though. It bought one. Three, to be precise. R.K. Black now owns three territories as exclusive franchisees of proactive, remote network management services run by The Utility Company, an Ottawa firm that opened its doors in 2006. Owner and President Chris Black calls R.K. Black's move into managed services "a natural progression [that] allows us to become a one-stop shop" for business products and services. All in all, not an unusual play for a reseller looking to grow its business and stay ahead of the competition.

"We had given some consideration to providing managed services in other times, using our internal resources," Black said. "But unless we could provide a superior service, we didn't want to do it. [The Utility Company] can do 80 [percent] to 90 percent of what we consider the heavy-lifting on the front end."

--> MSP franchisors are sprouting up like mushrooms in the IT world. Established franchise companies like 1 800 905 GEEK, Computer Renaissance, Fast-Teks, Data Doctors, CMIT Solutions, RescueCom and Computer Troubleshooters are stacking managed services onto their break-fix offerings. Upstarts like the Utility Company, Concerto Networks and Team Logic IT have entered the market in the past few years with MSP strategies firmly in hand. Those 10 companies boast 1,138 North American franchisees between them. And they're making serious inroads in the SoHo and SMB markets. 1 800 905 GEEK CEO Richard Cole, for example, estimates his 275 franchisees generate 60 percent of their revenue from businesses.

Independent VARs and MSPs that service small businesses now have to contend with competition that has national advertising firepower, branded mind share and, theoretically, standardized service levels. The question for those independents struggling to keep up is, do you still try to beat the franchises or do you join them?

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